CHAPTERV

TECHNOLOGY ACQUISITION EXPERIENCE IN THE INDIAN

DRUG INDUSTRY: IMPLICATIONS OF THE WTO

In this chapter it is proposed to evaluate the major technology

efforts undertaken in the Indian pharmaceutical industry before the

WTO-TRIPS Agreement and the post-WTO situation. The pre-WTO period

includes data analysis from 1950-51 to 1991-92. The analysis covers

surveys of foreign collaboration agreements between Indian

pharmaceutical firms and foreign firms. It also evaluates the process of

indigenous technology generation and transfer conducted by various

national laboratories and public funded -research institutes. In the post-

WTO situation the analysis is mainly confmed to trends in R&D and

implications of WTO-TRIPS Agreement on the Indian pharmaceutical

Industry.

V.l PRE-WTO TECHNOLOGY ACQUISITION EXPERIENCE IN THE INDIAN PHARMACEUTICAL INDUSTRY

.. The emphasis on technology generation has been part and parcel

of the philosophy of self-reliance practiced in India, which was discussed

in detail in earlier chapters. The efforts to gear up indigenous

technological capabilities picked up momentum in the late 1970s, in

which the recommendations of Hathi Committee had played an

important role. Three major recommendations of HCR may be mentioned

here, which are very crucial.

(i) Providing incentives to those pharmaceutical firms which

undertake in-house R&D and progressively the same should

190

become statutory for some compulsory in-plant research

activity;

(ii) Assigning special role to public sector by reserving certain

'essential drugs' to be manufactured by that sector alone;

(iii) Mandatory production of essential · drugs, in certain

quantities, by all the pharmaceutical flrms, including the

foreign MN Cs.

The introduction of the concept of "essentiality in drugs" by the

Hathi Committee had resulted in the pursuit of "need-based" technology

in the Indian pharmaceutical industry. In line with this thinking the R &

D efforts in the national laboratories were geared up towards generation

of new technologies, and in case of the drug industry the process

technologies. The efforts of public funded research laboratories in

transferring technologies to the drug industry have been commendable. 1

This is responsible for all the other developments that had

materialized in the private sector drug flrms to work in collaboration with

public sector units and research laboratories to improve upon the

process development technologies. R&D, which is the most accepted

indicator of technological effort, was very low before 1975, not only in the

pharmaceutical industry but also in the Indian manufacturing industry

at large .•

There were some visible efforts _towards R&D spending by the

Indian drug flrms, with the boost it got through the HCR. Table V.1

provides data regarding R&D expenditure in Indian Pharmaceutical

Industry from 1976-77 to 1999-2000. The current R&D expenditure is

around Rs. 320 crores (2000), which is 2% of annual sales of the

industry. Certain new generation drug flrms like Ranbaxy, Cipla, Dr.

Reddy's Laboratories, Lupin Laboratories, Nicholas-Piramal have been

1 A.V.Rama Rao, Op.cit.

191

attempting to spend on R&D in the range of 3-5% of their annual sales

turnovers, in the last few years, i.e 1996 onwards.

TABLE V.l R&D EXPENDITURE IN INDIAN PHARMACEUTICAL INDUSTRY

Year R&D Expenditure (Rs. Crores} 1976-77 10.50 1978-79 12.00 1979-80 14.75 1981-82 29.30 1983-84 40.00 1985-86 48.00 1986-87 50.00 1993-94 125.00 1994-95 140.00 1995-96 160.00 1996-97 185.00 1997-98 220.00 1998-99 260.00

1999-2000 320.00

Source: OPPI, Annual Reports, (various), Organization of Pharmaceutical Producers of India, Mumbai, 2002.

The number of firms recognized by the Government of India with in

plant R&D facilities in the Indian pharmaceutical industry is around

139; the list is provided in Table V.2.

TABLE V.2

LIST OF RECOGNISED IN -HOUSE R & D UNITS IN THE PHARMACEUTICAL SECTOR S.No. Name of the Firm 1. Acharya Chemicals 2. Alembic Chemicals Works Company 3. Alkem Laboratories Ltd. 4. Alpha Drugs 5. Alved Biologicals Pvt. Ltd. 6. Ambalal Sarabhai Enterprises 7. American Remedies Ltd. 8. Amrutanjan Limted 9. Anglo French Drug Company 10. Armour Chemicals Ltd. 11. Asian Chemicals Ltd. 12. Associated laboratories Pvt. Ltd. 13. Astra IDL Ltd.

192

14. Atul Products Ltd. 15. BDH Pharmaceuticals 16. Bengal Immunity Ltd. 17. Biocon India Private Ltd. 18. Biogenics India 19. Biological E. Limited 20. Boehringer- Knoll Ltd. 21. Boots Company Ltd. 22. BYX Chemicals Pvt. Ltd. 23. Burroughs Wellcome (India) Ltd. 24. Cadila Laboratories Ltd. 25. Cheminor Drugs Ltd. 26. Cibatul Ltd. 27. Cipla Ltd. 28. Citurgia Biochemicals Ltd. 29. Concept Pharmaceuticals Ltd. 30. Cynamid India Ltd. 31. Dental Products of India Ltd. 32. Dey's Medical Stores (Mfg). 33. Divi's Research Centre 34. Dr. Reddy's Laboratories Ltd. 35. Duphar Interfran Ltd. 36. Earnest Healthcare Ltd. 37. East India Pharmaceutical 38. Elder Pharmaceuticals Ltd. 39. Enzo-chem Laboratiories Pvt. Ltd. 40. Eskayef Ltd. 41. E. Merck (India) Ltd. 42. FDC Ltd. 43. Franco-Indian Pharmaceuticals 44. Glaxo India Ltd. 45. Globe Organics Ltd. 46. Gufic Ltd. 4 7. Haffkine Bio-Pharmaceutical 48. Hindustan Antibiotics Ltd. 49. Hindus tan Ciba -Geigy Ltd. 50. Hiremath Chemicals Ltd. 51. Hi-Media Laboratories Pvt. Ltd. 52. Hoechst India Ltd. 53. Indian drugs & Pharmaceuticals Ltd. 54. Indian Herbs Research 55. Indo-Pharma Pharmaceutical 56. Infar (India) Ltd. 57. IPCA Laboratories Pvt. Ltd. 58. Jagson Pal Pharmaceuticals Ltd. 59. Jayant Vitamins Ltd.

193

60. Johnson & Johnson Ltd. 61. J. Mitra & Bros. Pvt. Ltd. 62. Kanpha Labs 63. Kerala State Drugs 64. Kandelwallaboratories 65. Kody Medical Electronics Ltd. 66. Kopran Ltd. 67. Korea (India) Ltd. 68. Lakrne Ltd. 69. Lanz Ltd. 70 Li Taka Pharmaceuticals Ltd. 71. Lupin Laboratories Ltd. 72. Lyka Labs Private Ltd. 73. Maharshi Ayurveda Products 74. Malladi Drugs & Pharmaceuticals 75. Max India Ltd. 76. Medlay Laboratiories Pvt. Ltd. 77. Mehta Pharmaceuticals Pvt. Ltd. 78. Meridian Pharmaceuticals 79. Merind Ltd. 80. Metroni Drugs Pvt. Ltd. 81. Miles India Ltd. 82. M.J. Institute of Research 83. Nandi Chemicals Pvt. Ltd. 84. Natco Fine Pharmaceuticals 85. National Avian Health Labs 86. Neuland Laboratories Ltd. 87. Nitson Laboratories Ltd. 88. Nivedita Chemicals Pvt. Ltd. 89. NR Jet Enterprises Ltd. 90. Oriental Chemicals works (P) Ltd. 91. Parke-Devis (India) Ltd. 92. Prnsem Drugs & Pharmaceuticals 93. Pflme Intemation Ltd. 94. pfizer Ltd. 95. Planned Pharma Pvt. Ltd. 96. Polypharma Pvt. Ltd. 97. Procter & Gamble India Ltd. 98. Rallis India Ltd. 99. Ranbaxy Laboratories Ltd. 100. Raptakos Brett & Co. Ltd. 101. RC Pharma Ltd. 102. Reckitt & Colman of India Ltd. 103. Rhone-Poulenc (India) Ltd. 104. Roche Products Ltd. 105. Roussel India Ltd.

194

106. SAF Yeast Company Ltd. 107. Sandoz (India) Ltd. 108. Sarabhai M chemicals Research 109. Searle (India) Ltd. 110. Sekhasaria Chemicals Pvt. Ltd. 111. Shasun Chemicals (Madras) Ltd. 112. Shree Dhootapaper Shwar Ltd. 113. Shrishma Fine Chemicals Ltd. 114. Siris Ltd. 115. Smith Strainstreet 116. SOL Pharmaceuticals Ltd. 117. South India Research Institute 118. Standard Organics Ltd. 119. Standard Pharmaceuticals Ltd. 120. Standard Research Centre ·121. Stangen I,uno Diagnostics 122. Stellar Chemical Labs Pvt. Ltd. 123. Sun Pharmaceutical Industries 124. Synbiotics Ltd. 125. S.D. Fine Chern Pvt. Ltd. 126. Tablets (India) Ltd. 127. Tamil Nadu Dadha Pharmaceuticals 128. Themis Chemicals Ltd. 129. T.T.K. Pharma Pvt. Ltd. 130. Unichem Laboratories Ltd. 131. Unique Chemicals (Div. of J.B.) 132. Unique Pharmaceuticals 133. Uni-Sankyo Ltd. 134. U.S. Vitamin (India) Ltd. 135. Wallance Pharmaceuticals Ltd. 136. W~der Ltd. 137. Wockchardt Ltd. 138. Wyeth Laboratories Ltd. 139. Zandu Pharmaceuticals Works

Source: Answer to Question No. 512, dated 12-8-1992, Lok Sabha Proceedings.

The data provided in the above table is until 1993. However, the

latest data suggest that, by 1998, there are 42 foreign afflliated MNCs,

104 Indian domestic firms and the remaining public sector frrms, which

possess in house R&D facilities recognized by the Government of India.

However, the major share of research contributions come from the public

funded research institutes. The most notable public funded research

195

institutes devoted to drug research are the Central Drug Research

Institute (CDRI), National Chemical Laboratories (NCL), Indian Institute

of Chemical Technology (IICT) and Indian Institute of Experimental

Medicine, located in different states of India.

Before the efforts of · the public funded research in the

pharmaceutical industry started bearing fruit, a variety of licensing and

technical agreements with various foreign flrms supplemented the efforts

undertaken by premiere research institutions, laboratories and so on.

V.2 FOREIGN COLLABORATIONS IN INDIAN PHARMACEUTICAL INDUSTRY 1950-1991

Data have been analysed2 for 255 foreign collaboration agreements

for the period between 1951 and 1986 and separately for 37 more

collaborations from 1987 to1991.

Some earlier studies, have examined foreign collaboration

agreements in the pharmaceuticai industry for the period 1956-65,

involving 76, and agairl for the period 1962-72 covering 28 agreements. 3

Our study extends the earlier study of K.K. Subramanian, in the context

of pharmaceutical industry. In the earlier study it was found that the

technology supplier stipulated stringent conditions involving a deflnite

period of exclusion from seeking technology from other sources, when

the supplier's agreement was in force. This forced flrms seeking

technology from multiple sources to some kind of a 'tie-up'. It is widely

2 Data pool is constructed from data obtained from various sources; The main sources for pre-WTO data are: Government of India, Ministry of Chemicals and fertilizers, Dept. of Chemicals and Petro Chemicals; NICDAP, Drugs and Pharmaceuticals: Industry Highlights, National Information Centre on Drugs and Pharmaceuticals, CDRI, Lucknow; Government of India, Lok Sabha Secretariat (Loksabha Proceedings); Indian Drug Manufactures Association IDMA Bulletin, Annual report (various); OPPI, Annual Report (various) Indian Drugs and Pharmaceutical Industry (Various), Eastern Pharmacist (various), Indian Drugs (various), Pharma News (various), SCRIP (various), Phanna Times (various), Chemical Week (various), Chemical Business (various) and several other sources which helped build the data pool. 3 K.K. Subramanian, Foreign Collaboration in Indian Industry, People Publishing House, New, 1975.

196

established fact in economic theory of technical change that the

stringency of contracts is measured by (a) the price of contract, (b) the

duration of contract, and (c) option to switchover from the contract

without penal clause. As we will show in this chapter that in the context

of Indian pharmaceutical industry and in the data set that we have

furnished it was clear that by all the three criteria Indian drug firms were

in an advantageous position. In fact the evidence for the post-WTO

period, fragile though, shows that at least technologies imported were not

on the basis of local relevance and need. We provide further evidence in

case of technology generation and acquisition that the major technologies

that were developed ·were basically in the public funded research

institutions and govemment laboratories. In addition the magnitude and

intensity of the technologies transferred from these laboratories and

institutions to the private sector, (which of course, does not include

MNCs) was much below the potential of those institutions and

laboratories.

However, it should be noted that during the 1970s, Indian firms

were not quite experienced in negotiating contracts, and the choices were

also restrictive. The position in the pharmaceutical industry was

somewhat better than in other industries, for two reasons. Most of the

contracts executed during the period 1950 and 1970 were technical and

the duration of contract was restricted to 2 to 3 years. This information

is provided in Table V.3.

The total number of collaborations involved was between 125

Indian domestic firms and 128 foreign firms from about 24 countries.

Out of total 255 the highest number of 57contracts were executed

between the US and Indian firms which works out to roughly 22 per

197

TABLE V.3

REPETITIVE COLLABORATIONS IN THERAPEUTIC CATEGORIES

!Product Category No. of Agreements %of Colla- Total with Remarks boration country

1 2 3 4 5 I. ANTIBIOTICS --

1. Tetracyclines 9 3.52 US(8) Italy(1) 12_. Streptomycin 2 0.78 US(2l

Public Same Sector

3. Penicillins 7 2.74 US(1)_l_ Same US{2)} UK{1)} taly(2)}

Japan(2) 4. Erythromycin 5 1.96% US(1) Same

taly(3) Swiss(1)

5. Chloramphenicol 6 2.35 fRG(1) Same ~taly(ll San1e ~taly{3) Swiss(1)

6. Doxycycline 2 0.78 taly(1) Portug_al( 1)

~. Ampicillins 2 0.78 Swiss(1) taly{1)

8. Cephalosporins 3 1.17 taly(2)} Public Swiss(1)} Sector

9. Dosulfin 1 0.39 Swiss Same 10. Rifampicin 7 2.74 France(1)

Swiss{1) ·-Bulgaria(2) S.Korea(1) tpoland{2)

11. Kenamycin/ Gentamyciil 3 1.17 ~apan(1)} !Public ~ungary{2) }

198

Sector 12. Gentamycin 0 0 13. Amoxicillin 1 0.39 S.Korea

48 (18.82) II. STEROIDS

1. Steroids (Broad band) 1 0.39 jUS(1) 2. Hyderabad Cortisonse 1 0.39 jUS(l) 3. Hydroxy Progesterone 1 0.39 FRG(1) Same 4. Prednisolone 0.78 Others(2)

2

5 (1.96) III. ANALGESICS/ ANTIPYRETICS

1. Salicylic Acid 2 0.78 tlJS(2) 2. Aspirin 7 2.74 tlJS(2)

rt.JK(l) tlJSSR(l) Sweden(l) ~apan(l) ~omania(l)

3. Acetyly Salicylic Acid 3 1.17 IFrance(l) ~omania(2)

4. Pentazoncine 2 0.78 tus(l) ~taly(l)

5. Ibuprofen 3 1.17 jUS(l) Same ~ UK(l)

Canada(1) 6. Pheyl Butazone & Oxy 3 1.17 taly(1) Same

Phenyl Butazone Swiss(2) 7. Xylocaine 1 0.39 Swiss(l) 8.Tanneril 1 0.39 Swiss(l) Same

IV. VITAMINS 1. Vitamine A 5 1.95 FRG(1) }

US(l) } FRG(l) } Same Hungary(!)} Swiss(1) }

~-Vitamin C 2 0.78 WRG(l) taly(l)

K3. Vitamin D 2 0.78 tlJK(l)

199

IN etherlads(l 4. Vitamin B12 4 1.56 Sweden(2)

lFRG(l) [talv(l)

5. Niacin & Niacinamide 0.39 Sweden( I) 1

14 (5.99) V. ANTI HISTAMINES

1. Phenyl Ephedrine & 2 0.78 tlJS(l) FRG(l) Same ~phedrine 2. Chlorpheniramine Maleate 1 0.39 Swiss( I) Same

3. Antihistaminic drug (BB) 1

0.39 Belgium( I) Same

4 (1.56) VI. SULPHA DRUGS

1. Sulpha Drugs (BB) 2 0.78 iUKfl) } Same Swiss(2)}

2. Sulpha Somidine 4 1.56 FRG(4) Same 3. Sulphamide - 1 0.39 FRG(l) 14. Sulphamethoxv Pvridazine 2 0.78 FRG(2) Same

9 (3.52) VII. ANTI ASTHMATICS

1. Aminophylline 1 0.39 WRG(l) Same Parent

12. Hydrozy Ethyl 1 0.39 WRG(l) rrheophylline 13. Pyperthadie HCL · 1 0.39 FRG(il j4. Theophylline 0.39 [FRG(l) Same

1

4 (1.56) VIII. ANTI TUBERCULARS

1. Pyrazinamide 1 0.39 ITtalv(l) 12. Morphazinamide 1 0.39 taly(l) 3. PAS & its salts 3 1.17 Sweden(!)

!Panama( I) 5 (1.96) Others fll-

IX. ANTI FUNGALS 1. Ecozonal Nitrate 2 0.39 lSwiss(il Same

200

Parent 2. Fungal Diastase 1 0.39 Japan(1) Sante 3. Aureomycin Sulphadiazine 0.39 US(1)

1

3 (1.17) X. CNS STIMULANTS

1. Caffeine 0.39 ~apan(1) 1 1 (0.39)

XI. DIURETICS 1. Diuretics (BBl 1 0.39 ~SJl) 2. Hygrotan 0.39 Swiss(1) Same

1 Parent

2 (0.78) XII. ANTI HYPERTENSIVES

1. Methyl Dopa 1 0.39 fRG(1) Same Parent

2. Methyl Dopa 0.39- [taly(1) 1

2 (0. 78) XIII. ORMONES, ENZYMES, SERA, AMINO ACIDS AND OTHER

BIOLOGICAL PRODUCTS 1. Liver extract 1 0.39 US(1) 2. Sera & Related Drugs 3 1.17 US(1) Same

FRG(2) Product t3. 15 Methyl Postaglaindin 1 0.39 US{1) 4. Pepsinfpeptoxjpancreatin 2 0.78 FRG(1)

Hungary(1) 5. Dextran 2 0.78 Swiss(l) Same

France{l) Parent 6. Haemasto-Heptive 1 0.39 France{l)

(Not in !operation)

7. Haepathere 1 0.39 IFrance(l) 8. Haemoglobin Syrup 1 0.39 Wrance(l) 9. L-Cystine Amino Acid 3 1.17 Pa:Ran(3l 10. Lnestrenol 1 0.39 !Netherlands

Ill) 11. Norgestrol & its tablets 2 0.78 1Hungary(2) 12. Enzymes Extracts 0.39 Others(1)

201

1

19 (7.45) XIV. MEDICAL & SURGICAL DEVICES AND DRUG SUPPLEMENTS

1. Gloves 1 0.39 ~S(1) 2. Infusion Set 3 1.17 ~S(1)

FRG(1) Same Swiss_(l) Parent

3. Plastic Blood donor set 2 0.78 ~S{2) 4. Artificial sweeteum 1 0.39 iUS(l) 5. Citex paste 1 0.39 IOK(l) 6. Hard Gelating Capsules 4 1.56 lliK(21

Canada(2) 7. LV. Fluids 1 0.39 i.FRG(1) 8. Flex Flax-PVC 1 0.39 Swiss(1) Sarne

Parent 19. Plaster of Paris Bandages 1 0.39 Swiss(1) 10. Hypothermic Needles 1 0.39 US(1) 11. Painfinishing System 0.39 Sweden(l)

1

17 {6.66) XV. VACCINES & IMMUNOLOGICALS

1. Immunological Vaccine 1 0.39 ~S(1) 2. Foot & Mouth Disease 2 0.78 ~K(1)

Vaccine ~S(l) 3. Triple Vaccine 1 0.39 IY ogoslavia( 11 Same 4. Tetanus Antitoxin 1 0.39 !Yugoslavia(lj Same 5. Diphtheria Antitoxin 1 0.39 !Yugoslavia( 1) Same 6. Sera & Related Products 0.39 ~K(1)

1

7 (2.73) XVI. ANTI ULCER

1. Cimetidine 0.39 taly(1) 1

1 (0.39) XVII. ANTI DIABETIC

1. Insulin 0.78 Netherlands Same 2 (1} product

2 (0.78)

202

XVIII. VASODILATOR 1. Vasodilator- BB 2 0.78 ~taly(1) Same

IN etherlands product If 1 l

XIX. TRANQUILLIZER 1. Tranquillizer Drug 1 0.39 ~elgium(1) Sarne

product --2. 1 Para-Hydroxyphenyl 0.39 Swiss(2)

plycine & its Salts 6 ~ungary_(2l IUS(1) iN etherlands

7 (2. 73) (1)

XX. PATENTED AND OTHER DRUGS 1. Cynomin 1 0.39 iUS(1) 2. Piadines Pytidines 1 0.39 ~S(1)

3. Formycin 1 0.39 UK(1) 14:_. Poldrine 1 0.39 UK(1) 5. Robapharm 1 0.39 UK(1) 6. Lovaphed 1 0.39 UK(1) 7. Dulcolax 1 0.39 FRG(1) 8. Saridon 1 0.39 Swiss(1) 9. Sintrol Tofranil 1 0.39 Swiss(1) Same

Parent 10. Tabufon 1 0.39 Swiss(1) Same

Parent 11. Pholophyllum 1 0.39 ~wiss(1) Same

Parent 12. Lamprone 1 0.39 ~wiss{1) Same

Parent 13. Stout Tonic 0.39 ~thers(1)

1

13 {5.09) poa. ANTI DYSENTERY DRUG 1. Dialoxaminde Furoate 0.39 UK(1) Same

1 Parent

1 (0.39) XXII. BULK DRUGS

1. Nalidixic Acid 1 0.39 IUS(1) 2. Phenylphrine Benzylate 1 0.39 t!l_Slll ~. Premidonne 1 0.39 IUK(l) Same

203

Parent f4. Propanolol 1 0.39 IUK(l) Same

Parent 5. Gamaglobin 1 0.39 . IUSSR(1) --6. Haptagluconate 1 0.39 ~taly(l)

7. Idopinic Acid 1 0.39 ~taly(1) --8. 6 APA 1 0.39 ~taly( 1) ~- Perchloroethy_lene 1 0.39 Swiss(l) 10. Methyl Pentothoate 1 0.39 Sweden(1) 11. Methyl Ethyl Pyridinzine 1 0.39 Sweden(l) 12. Glucose 1 0.39 Netherlands

1) 13. Trimethoxy-Benzaldehyde 0.39 ~ether lands

1 (1)

13 (5.09) XXIII. NON-CLSSIFIED DRUGS (Bulk & Intermediate)

1. Non-Classified 51 20 IUS(11) Same Pharmaceuticals IUS(3) Parent

IUK(12) IUK(4) ·-fRG(4) fRG(1) Swiss(S) Swiss(2) Sweden(2)

- Sweden(l) Japan(l) Sarne

, Parent Netherlands Srune 1) Parent

Belgium(2) Same Parent

!Bulgaria( 1) [Panama(l) Same

parent Others(l) ·-

Source: Author's field data and as mentioned in f.n.2 in this Chapter.

cent. The highest shares of individual contracts for the American firms

were by Pfizer and Lederle. The second highest was by the UK and Swiss

204

firms, with the number 35 representing approximately 14 percent. The

major share of contracts from Switzerland, went to the top firm of that

country namely Hoffman la Roche. The top UK firms, which had the

highest number of collaborations, were Glaxo and Burroughs Wellcome.

The other collaborations were FRG (30), Italy (27), Sweden (10), Japan

(10), Hungary (9), the Netherlands (8), France (6), Belgium (4), Bulgaria,

Yugoslavia, Canada and Romania (3) each, USSR, Panama, South Korea

and Poland (2) each, Portugal (1) and others (6). The firms from the

USSR were state controlled enterprises and from Italy were drug

consortia and therefore the number of firms is quite low. The number of

foreign collaboration agreements in Indian manufacturing industry

during 1950-92 amount to 14,199.

The percentage share of pharmaceutical collaborations as a

proportion of the total manufacturing industry works out to be less than

3 per cent (2. 72 percent to be precise) for the forty two year period

between1950 and 1992. Technology supply from top 5 countries

accounted for 90 percent of the total whereas the remaining 10 percent

was shared between 19 odd countries. The diversified sources of

technology supply indicate the selective approach followed by the

technology recipient, i.e. India. By the same token it could be argued

that the. dispersal of sources of technology supply is an indicator of the

relative bargaining strength of the Indian drug industry. In the initial

stages the Russian technology, especially in the synthetic drugs

manufacture has played a pivotal role m technological acquisition

capabilities of the Indian drug industry.

In Table V.3, the first column shows the drug product for which

the collaboration is sought. The second column shows the number of

collaborations sought for that product from various countries. The exact

percentage of the collaborations out of total number of collaborations is

given in the column four. The filth column represents collaborations by

name of the country. The last column shows whether the collaboration

205

is by the parent company to its subsidiary (denoted by 'Parent1 or if the

collaboration is repetitive in terms of product or firm by country of origin

(denoted by 'same').

Within the data set on foreign collaborations an examination of

distributional pattem of licensing firms is also undertaken. The

distributional pattem reveals that in the early stages of post­

Independence era, there was marked dependence on UK (45.6%)

reflecting extension of the colonial past, followed by US (15.3%) and

Germany (14.9%). Table V.4 presents distributional patterns of

licensing. Overall experience in technology acquisition in the Indian

pharmaceutical Industry displays some amount of judicious selectivity in

choosing the technology suppliers.

As can be seen from Table V.4, the dispersal of technology supply

sources, as an indicator of relative bargaining strength of the Indian

pharmaceutical industry is well conceivable. In other words, the

stringent conditions, which led to captive tie-ups with technology

suppliers in other manufacturing industries, reported in Subrahmanain's

study, found to be not quite applicable in the case of the Indian

pharmaceutical industry. In fact, it could be argued plausibly that the

fair dispersal of sources of technology supply, ranging from former

Socialist Bloc countries, to Italian fmns, supplying requisite technology

in the manufacture of 'essential drugs', specifically to the public sector

units, had systematically augmented the domestic technological

endeavours, quite in keeping with the policy of self-reliance of the period.

There was a sudden spurt of foreign licensing contracts in 1980,

which continues thereafter until 1992 indicating that the policy of

liberalisation had its impact on the Indian pharmaceutical industry. The

reasons for this sudden spurt are not discernible to any plausible

explanations. The period in question was not marked either by any

therapeutic revolution~ or by any innovational drug products, which

warranted such a sudden spurt in technology seeking from abroad.

206

Indeed, if that were the case, the foreign drug-MNCs would have no

reason to advance newly innovated drug technologies on a priority basis.

On the contrary, a closer examination of our data clearly reveals that the

emphasis on need based essential drug technology was thrown out of

gear. The nature of collaboration agreements entered with the US drug

firms in 1980 (the highest number of agreements contracted in the whole

period of study) showed that, out of 23 agreements 19 were either non­

essential drugs or were vitamin products. In fact in the post-1990s

period the US had emerged as a dominant player in the Indian

pharmaceutical industry.

The relative bargaining strength of the industry is always reflected

m the nature of collaboration, type of contractual obligations, and

options for out-sourcing technology supply. Available evidence up to

1972, pointed out by Subramanian, showed that the terms of reference

of the contract were weighted so heavily in favour of technology supplier,

that domestic firms were helpless, even in cases where foreign MNCs

circumvent the contractual clauses. However, when we exaniined the

terms of reference, and contractual obligations in 98 foreign

collaboration agreements in the Indian pharmaceutical industry during

1977-87, it was found that the terms appeared not too compelling.

207

Period us UK

1951- 13 (1) 8 (3) 60 (25.49) (15.68)

1961- 6 (3) 5 (4) 70 (14.28) (11.90)

1971- 2 (4) 4 (2) 79 (6.89) (13.79)

19803 23 (1) 18 (2) (28.39) (22.22)

1981- 10(1) Nil 86 (19.23

Grand4 54 (1) 35 (2) Total (21.17) (13.72)

TABLE V.4

DISTRIBUTIONAL PATERN OF LICENSING AGREEMENTS IN INDIAN •PHARMACEUTICAL INDUSTRY: 1951-1986

COUNTRY

Nether-SWISS FRG Italy Sweden Japan Hungary lands France Others

9 (2) 8 (3) 1 (7) Nil Nil 1 (7) 2 (6) 4 (5) 5 (4)

(17.64) (15.68) (1.96) (1.96) (3.92) (7.84) (9.8) 5 (4) 7 (2) 8 (1) 3 (5) 2 (6) Nil 2 (6) Nil

2 (6) (11.90) (16.66) (19.04) (7.14) (4.76) (4.76) (4.76)

2 (4) 3 (3) 9 (1) 3 (3) 2 (4) 2 (4) 1 (5) Nil

1 (5) (6.89) (10.34) (31.03) (10.34) (6.89) (6.89) (3.44) (3.44) 11 (3) 9 (4) 3 (7) 2 (8) 3 (7) 2 (8) 1 (9) Nil

4 (6) (13.58) (11.11) (3.70) (2.46) (3.70) (2.46) (1.23) (4.93)

8 (2) 3 (5) 6 (3) 2 (6) 3 (5) 4 (4) 2 (6) 2 (6) 6 (3) (15.38) (5.76) (11.53) (3.84) (5.76) (7.69) (3.84) (3.84) (11.53) 30 (3) 27(4) 10 (7) 10 (7) 10 (7) 9 (8) 8 (9) 6 (10) 18 (5)

(13.72) (11.76) (10.58) (3.92) (3.92) (3.52) (3.13) (2.35) (7.05)

1Pharma

2Former Licen-

Socialist Total sing as %of Total

Nil 51 3.76

(100.00) 2 (6) 42

1.41 (4.76) (100.00)

Nil 29 1.24 (100.00)

5 (5) 81 16.56

(6.17) (100.00) 6 (3) 52

1.35 (11.53) (100.00) 13 (6) 255 2.32 (5.09) (100.00)

Source: Data obtained by the author as explained in the text. Figures in ( ) brackets are percentages and in [ ] brackets are ranks of the countries in the period concerned.

1. Pharmaceutical licensing as a percentage of total licensing agreements in the Indian industry is obtained by taking total in each period.

2. Former socialist bloc countries include USSR, Czechoslovakia, Bulgaria, Yugoslavia, Poland and Romania, Rank is assigned to these countries and also to the column representing 'other's, since in the pharmaceutical industry these columns and significant.

3. As explained in the text. 4. Grand total represents all types of collaboration agreements in the pharmaceutical industry, which include technical, financial,

technical-financial and designs and drawings.

208

Table V.S below provides the details of nature of collaboration,

terms of reference of contractual agreement from 1977 to 1987.

TABLE V.S DRUGS AND PHARMACEUTICALS

FOREIGN COLLABORATION ( 1977 -1987)

Name of the Name of the Items of

Sl.No. Indian Year foreign Manufact Terms of collaboration

Company I appli cant

Collaborator ure

T.K. H./ Royalty

Desig %for

n Years & Equaity Duration Engg.

Export participation (Years) /Con obligati sulta on etc. ncy Fee

1. Boots (India) 1977 Boots Co. Ibuprofen Ltd., U.K.

Astra of Pharmace 2. IDL Chemicals 1978

Sweden utica! products

Welcome Foot and

4. Indian Dairy 1979 Foundation

Mouth Corp.

Ltd., U.K. disease Vaccine

Ininter and Ampicillin 5. Sh. C.I. Gandhi 1979 Proch em,

Italy Trihydrate

Standard M/s. Proter Erythromy 6. Pharmaceuticals 1979

Ltd. Milan, Italy cin

West Bengal Ph and Mitsui

7. Phytochemical 1980

Toatsu Aspirin Dev. Chemical,

Corporation Ltd. Tokyo Calcutta. Kerala~State

Tennaco 8. Drugs &

1980 Chemicals Salicylic Pharmaceuticals

U.S.A. Acid. Ltd. Kerala

Methyl Prostaglan

9. Albert David

1980 Upjohn Co., din F-2

Ltd., Calcutta. U.S.A. Alpha Thanprosi n etc. D-

Dr. Sanjay Upjohn Co. Phenylglyc 10. 1980 in & -do-Amin, Baroda U.S.A.

Chloride HCL

Boehringer- Boehringer Alpha

11. Knoll Ltd., 1980 Mannheim Methyl

Bombay West Dopa Germany

Sharda Homoeo Laboration Homoeopa

12. Pharmaceuticals 1980 thic Ltd. France

Medicines 13. Dr. Gadde S. 1980 Petrole Salicylic

209

Murthy New Chemicals Acid York Engr., Paris

Boehringer Knoll A.G. Theophylli ne Amino

14. Knoll Ltd., 1980 West Phylline Bombay germany etc.

Bracco Pharmace

Pharmed Pvt. Industrial uti cal

15. Ltd. Bombay 1980

Chemical, Formulatio ns of

Italy Bracco Mr. B. Dr. E.

16. Ramender 1981 Fresenius,

Intravenou Reddy Ltd., s Fluids Hvderabad·

F.D.R.

M.s Cadila General -

17. Labs.,

1981 Precision Rifampicin Switzerland

D. us$ 10

M/s Ininter Phenylglyc Ls: Per Kg.

Sh.C.I.Gandhi ine, P- US$ Of 18. Calcutta

1981 SA, Hydroxy 65,00 Product Switzerland phenyl- 0 for 5

!llvcine vears 5% Expon Obligati on: 10%

M/S IBIS Health M/s Sweet N LS: during

Cumberland US$ first two 19. Aids Ltd. 1982

Packing Low

35,00 years of Bombay

Corp., U.S.A. (Sweetner)

0 producti - on& 20% for "

the next 3 vears.

LS: US$

M/s Themis M/s, Unico, 65,00 20. Pharmaceuticals 1982 Paris, Pifampicin 0/- us

, Gujrat (France) (Sub. To taxes! LS:Ja

M/s Toyo 6Amino panes

21. M/ s, Max India

1982 Jozo Co. Ltd. Penicillani e yen

Ltd., New Delhi Japan cAcid 12.3 Millio n

M/s Bhandari All types of

Dolisos M/s L.P.H. Homeopat hie

22. Laboratories 1982 Dolises, Medicines

40%

Pvt., Ltd., New Paris, France and allied Delhi items etc.

M/s IndL Salicylic LS:

M/s Southem Acid Rs, 36 Medico Indl.

Export-Salicylates lakhs

23. Chemicals Ltd., 1982 import, State including net of

39%

New Delhi Company Aspirin (taxes

Romania etc. i Papin/Cys

M/s Bio- M/s, Bicon teine

24. chemizyme (I) 1982 Ltd. Cork Hydrochlo 40% Pvt. Ltd., Ireland

ride/Chon Bangalore drotin

Sulphate 25. M/s Win- 1982 M/sSterline: 1) LS: 40%

210

Medicare Pvt. Drug Inc. Nalidixic US$ Ltd., New Delhi USA Acid 2,00,0

2. 00 Gentazoci Lakhs n 3.Phenylep hrine 4.Benorgla te Caphalexi nand 7-Aminodesa cetoxy-Cephlao Sporanic Acid

LS: 1,20,0 00

Mfs Ininter (Sub.

Sh.C.I.Gandhi Taxes) 26.

Calcutta 1982 S.A. Chiasso,

US$ Switzerland

96,00 0) (net of taxes I

Mfs Salicylic

M/s International Acid,

LS:RS 27.

Intemational 1982 Business

Sodium 49,41 40% Drug Co. Ltd.,

Associates Salicylate Lakhs

Hyderabad Inc. USA. abd Aspirin

US$ M/sAmar Dye- Mfs Sterling Salicylic 1.25

28. Chern. Lab., 1982 Drug Inc., Acid and lakhs Bombay USA. Aspirin (sub. To

taxes) LS:US

M/s. Jukase M/s Capsule Empty $ 100% 29.

Ctili Capsule 1982

Technology hard 55,00 Export 40% Pvt. Ltd., Intemational gelatine 0 (net oriented Bombay Ltd., Canada capsules of

taxes I

Econazole LS:

M/s Ambalal Mfs. Cilag Nitrate &

SW.F Sarabhai R, 2

30. Enterprises Ltd., 1983 Chemie Ltd., its lakh

Bombay Switzerland Formulatio (net of n taxes)

M/s LS:US M/s IBIS Cumberland

Sodium 66,00

31 Health Aids 1983 Packing Saccharin

0 (net Ltd., Bombay Corpn. New of

York USA taxes) Mfs techno LS:US

32 Shri Arun K.

1983 Export Rifampicin $ 2.0

2.5% for Mittal New Delhi (Pharmachin 5 years

). Bulgaria lakhs

M/s LS: M/s Shrihma Industrial Salicylic Rs. 36

33. Fine Chemicals

1983 Export Acid and lakhs and Import Aspirin (net of Pharmaceuticals Company. Romania taxes)

M/s Themis M/s Dephenylg LS:US

34 Chern. Ltd. 1983 Medimpex, lycinefpar $ 1.0

Bombay Hungary a-Hydro- lakh Phenylglyc fnet of

211

in e. taxes} M/s Pefco M/s Ethoxy LS:

35. Foundry and

1983 Dynamit Methylene DM 5% for 5 Chemicals Ltd. Nobel, West Malonic 45 years Pune German_y Ester. lakhs

LS:

M/s Fouress us$ Mfs Dobfar, 1.75

36. Engg. (IndiaO 1983 SPA, Italy 6APA Iakhs Ltd. Bombay.

(net of taxe& LS"

Mfs us$

37. Mfs Curewell (I)

1983 Pharmachim Rifampicin 2.00

2.5% Ltd. Faridabad. Iakhs , Bulgaria.

(net of taxes(

Time

Mfs Sidmak M/s Sidmak release LS: Pharmace us$ 38. Lab. (I) Ltd. 1983 Lab. Inc., utica! 2.50 Valsad. USA. formulatio Iakhs.

\. ns

M/s Pefco M/s LS: us$ 10 per kg,

39. foundry & 1983

Secifarma D- us$ net Chemicals Ltd. SPA, Milan, Naproxen 1.06 exceedin Pun c. Italy Iakhs

g5% M/s AB

I) Salicylic a)AB Mfs Rajasthan Bofo Acid Bofors State Indl. rs

2) Aspirin Babel No be

40. Development &

I (Acetyl

SF 10% Chemat

Investment Che

Salicylic ure 10% Corpn. Ltd.,

matu Acid) b)

Jaipur 3) Sodium Swadfu r,

Salicylate nd 10% Sewd en

LS: Mfs Punjab US$ Sate Indl. Mfs Faster 16.00

41. Development 1984 Wheeler, Vitamin-C lakhs Corpn., Ltd., Italy (sub. Chandigarh. To

,, taxes} M/s War! d LS: Rs.

Shri P.K.N. Che L-Cystine 36.00 42. Panicker, 1984 mica and Amino lakhs

Madras Is Acid powder (sub. To Co. taxes) Japa n

LS:

M/s Chong us$

M/s Alembic 5.00 43. Chemicals 1984 KunDang

Rifampicin lakhs Works Co. Ltd. Corpn.,

(sub South Korea. to taxes}

L- LS:

Shri m. Shyam M/s World Cystimne

Japan

44. Prasad reddy 1984 Chern. Co, & Amino

ese

Mardas. Ltd. Tokyo Acid

yen (Japan).

powder 36.90 lak.'ls

212

I KH: SF 2.40 lakhs

Mfs I.V.F. Tech. M/s Ranbaxy Maschinerjbr Plaster of Ass.

L!.-.::J. Lab. Ltd. New 1984 ik Paris Fee Delhi Schaffaysen, Bandages SF

Switzerland 0.60 lakhs (sub. To taxes\ LS:

M/s us$ Mis Ranbaxy Fabbrica Pentozacin

2.25 3.5% for 46. La . Ltd. New 1984 Italian a lakhs

Delhi Sintetici, e

(sub. 5 years

I S.P.A., Italy To taxes\

i LS: I

I Mfs A:o:tra Amino

29.40

47. M/s Astra-IDL

1985 pharmaceuti

pencilliani lakhs

39%

I LTd., Bangalore, cals, cAcid

(sub. Sweden. To

taxes) 1. Geceon

M/s Uni-Richter Richter Ltd. D-

48. 1985 2. Medimpex N orgestrill 39.5%

I (P) Ltd. Bombay Trading Co., tablets Hungary

Shri J.J. M/s Baris 6-APA. D-LS: us$

49. Nerurkar, 1985 Entex, SA, Phenyl 3.00 Indore Spain. Glycine

lakhs

Phenylacet us$

M/s 75,00 50.

M/ s Max India 1985 Finchimica,

yl-7 Amino 0 (net 5 years

ltd.New Delhi Italy

Desacetox of

y Acid taxes\ LS:

Mfs Wolf Sterile DM

51. M/s M.B. & Co.,

1984 Brikmaier,

Surgical 2.00

Calcutta west lakhs Germany

Sutures (net of , taxes}

Pharmace uticals in LS:

M/s Mayer BIOVAIL times pound

52. Organic (P) Ltd. 1985 S.A., drug- Sterli 4% (sub

40% delivery of tax) -

Thane Switzerland ng system in one capsule lakh form

M/s Srinivas Mfs World 100 53. Cystine, 1985 Chemical Co. L-Cystine export

Hyderabad Japan oriented

M/s The east LS:

Mfs Hauba us$ 54. Coast Pesticides 1985 Inc., USA

Ibuprofen 33,00 3% 60%

Ltd., Madras 0 LS:

Doxycyclin US$

Mfs Sarabhai Mfs Havione 5 55. Chemicals Ltd. 1985 Lis bow

e & its lakhs

Baroda Portugal formulatio (sub. ns.

To taxes\

213

LS:

M/s Capsule US$

Mfs London Hard 1,50,0 56. Rubber Co. (l) 1985

technology Celatine 00

International Ltd., Madras Ltd. Canada

capsule (sub. To taxes\

Mfs

57. Shri P. Gupta,

1986 OCEANDEN TMB/PGC LS:25

5 years 40% Calcutta EBV. /HPG. Etc. Iakhs

Netherlands LS:US

Shri Dinesh $ 21

58. Narain Sharma, 1986 Mfs Proter of Rifampicin

lakhs Milan, Italy (sub.

Agra To taxes\

Sh. K. Mfs Ing. LS:

ramabrahman, Wolf

Sterile DM 59. Vishakhapatna

1986 Birkrnier, Sutures 2.5 west

m lakhs germany

Mjs LS:

Mfs Intertoch Dipyridam us$ 5% for 5

60. Rajyalakshmi 1986 research

ol& 84,00 years 60% Chemicals P.

Corpn., Phenothia 0 (net_ (sub. To

Ltd., Hyderabad zines. of taxes) U.S.A. taxes}

K.V. LS:US

Pharmaceuti Dipyridam $ 5% for 5

61. Sh. Samir K.

1986 cals ol & 84,00 years

60% Shah, Bombay lnternatioanl

Phenothai 0 (net (sub. To zines of taxes)

Inc., USA. taxes) LS;

CIECH US$

Mfs Hindustan Imports & 0.5

62. Antibiotics Ltd., 1986 Exports Ltd., Rifampicin millio

Pune Poland n (net of taxes} LS:

M/s SoL M/s general US$ Precision 9.50

63. Pharmaceutical 1986 LIECHTENS Rifampicin lakhs

10.6%

Ltd., f!yderabad TIEN (net of taxes\

Medicated LS:

Mfs Shrisma M/s Sprays us$ and 1,20,0

64. Fine Chern. Ltd., 1986 Mentholatu formulatio 00 40%

Bangalore m, U.K. nsand (net of creams taxes\

KH:

Mfs Indian Recordati Phenlglyci us$ 4,14,

65 Organic

1986 Industry ne Base 285

Chemicals Ltd., Chemicals, for other (sub. Bombay Italy. items To

.. taxes\ LS: US$

Prof. Ram Gupta M/s Fermic Cephalexi 5

66. 1987 lakhs 60% Texas, USA Mexico n (sub.

To taxes\

67. The Himachal 1987 M/s Rifampicin LS:

214

Pradesh Ind. Pharmachin Kh us Dev. Engineering $9.50 Corporation SRL., Italy. lakhs Ltd., Shimla (sub.

To taxes} LS:

Shalimar Female SEK

68. Synthetics Pvt. 1987 M/s Dambi Hygiene 2.50 305 for

50% AB, Sweden lakhs 5 years

Ltd., Bhopal Padsm etc. (net of taxes} LS:

M/s KN M/s JBF Intertech Methyl US$ 3% for 5 69. Synthetics Ltd. 1987 Research Dopa Bulk 120 50%

Bombay Corpn. Drugs lakhs years

U.S.A. (net of taxes} LS:

M/s Vneland US$

70. M.s Indonex Pvt.

1987 Laboratories Poultry 1,75,0

20% Ltd., New Delhi

Ltd. USA. Vaccines 00

(net of taxes} LS: us$

M/s Armour M/s Steritic Sodium 32,10

71. Chern Pvt. Ltd., 1987 0 Bombay Italy. Ampicillin

(sub. To taxes} Expor t obliga

LS: US$ tion: Atleas

Shrishma Fine 15 lakhs & t 75%

Chern. & desinc etc.

for 10 72 1987 Paracetamol us$ 0.3 Pharmaceuticals lakhs

years Pvt. Ltd.

(sub. To ext en dable

taxes) for anoth er 5

-~ years LS:

Polytechna, Enzymes 6 Rs. 25 lakhs Royalty 73. HPMIDC 1987 Spofa, APA 7 (sub. 2%

Prague ADCA To taxes} LS:

M/s P.S.I.D.C. M/s Techno- Vitamin- 111 74.

Chandigarh 1987 export, C/ lakhs

USSR. Sorbitol (sub to tax} LS: US$ 60,00

Institute of Life saving 0 for

75. M/s Serum 1987 Immunology drugs impor

Institute Yugoslavia (Vaccines t of

etc.) desig nes of Drawi ngs

76. M/s Vinati 1987 M/s Hamari Ibuprofen LS: J. 3% on 10% amounting_

215

Enter Prises; Chemicals Yen internal to Rs. 241 lakhs Bombay Ltd. Japan 950 sales & in the total paid

lakhs 5% on to capital of Rs.

(net of exports 240 lakhs.

taxes) both subject to taxes --

Tetra 40% amounting Mfs Bee. Mfs Nobal Butyl

to Rs. 4 lakhs in 77. Chemicals 1987 Kemi total paid up

Bombay Sweden Ammoniu capital of Rs. 10 m Bromide lakhs

LS: Know-how

Mfs Lupin M/s nelson Cephalosp fee:

78. 1987 .US$ Labs., Bombay SPA, Italy orines

85,00 0 (net of taxes)

Equity M/s LS: Participation

79. Mfs S.S. Drugs

1987 Perpharma, Rifampicin

us$ byNRl (on Ltd., New Delhi A. G., 12 non-

Switzerland lakhs Repatriable basis) 5. 70%

us$ Mfs Gentamyci

3000, 80. H.A.L. 1987 Pharmachin, 000

Bulgaria n (net of

taxes\

LARK SPA, 7 ADCA,

81. Regent Chern. 1987 cefazolin Italy

ceohalexin Japan ese 8.65%

Protchem Union Bros. yen 100% amounting to

82. Industries, 1987 Industries, Amino 10 for ten

Rs. 22.50 lakhs

Madras. Japan Acids crores in the total paid

(sub. years up capital of Rs.

Of 260 lakhs.

taxes) us

Venkateswara $39,0

83. Hatcheries, 1987 Tri Bio-Labs. Marek's 0 Inc. USA Disease lakhs

Hyderabad (net of taxes)

Royalty us$ 42.00 per

Shrishma Fine Dr. Ing.

us$ tonne Export \ Chemicals & 2.00 (net of obligation 80% Mario Biazz i Paracetam

84. Pharmaceuti- 1987 Vevey ol Projects

lakhs taxes) for ten years, cals (Karnataka) (net of on extendable for

Ltd. Switzerland taxes) export another 5 years

for a period of six vears

(i) Fungal us$ a) 50% amounting to

Enzymes 50,00 Rs. 10 lakhs

85. Bio Chemizyme

1988 Biocon Ltd., ii) Natural 0 5% for 5 b) 25% NRl on

India Ltd. Ireland Colurs (sub. years non-repatrible iii) Natural To basis

Gums taxes) amounting to Rs. 51akhs.

216

Johnson & Needles 77,00

86. Johnson Ltd. Surgical 0 (net of

Bombay Setures taxes) US$

Biochefarm 1,50,0 87. IDPL 1988 SA Penicillin 00

Switzerland (net of taxes}_ US$

Lupin Labs., Verex Labs., Sustained 45,00

88. 1988 release 0 (net Bombay Inc. USA tabs. of

taxes) Royalt y5% on intern a! sales

Artificial &5% Export

Hermes 40% amounting Sweetners

on oblicatio to Rs. 40 lakhs 89.

Hermesetas of 1988

Sweetnee Sterile

export n 75% in the total paid Idnia Ltd. Ltd.,

Gen both

for 5 up capital of Rs.

I Switzerland

compound subje lOOlakhs cted

years

to taxes for a period of 5 years

US$ 0.25% 4.5 amounting

Alpha Drug Chemen D(J 5,14,5 subject toRs. 9.10 phenyl lakhs in the

90. India Ltd., 1988 Teone S.R.L. Glycine

00 to taxes total paid up Bombay Italy (net of for 5 capital of Rs. etc. taxes) years 190.90 lakhs

Specialise

Mr. F.N.C. d us$ Chemical

Menon Bombay, Kelsen Reactors

1,46,0 91. CfO Sharp & 1988 International

Pollution 00

Thannan, , USA Control

(net of Bombay

Equipmen taxes)

.. t ·> 20%

amounti ng to Rs. 200

us$ 17 lakhs in 92. M/s Astra- IDL Rifampicin lakhs (net the total

of taxes) paid up capital toRs. 1000 lakhs.

i) L.S. JYen: 360 lakhs

M/ s Alpha Drug Mfs Fuso, ii)

93. India Ltd. 1988 Chemicals 3,4,5 Basic

Chandigarh Ltd., Japan TMBA Engy:

J. Yen: 225 lakhs (net of

217

94.

95.

96.

97.

98.

.. taxes)

L.S.-F.E. -40%

Export amounting to

Female DM-

obligatio Rs. 70.40 lakhs M f s Shalimar J. Wriths & 75,00 NRI Synthetics 1988

Co. Hygienic 0 (net

n30% Participation Pads etc.

of for 5 40% amounting

taxes) years toRs. 40.40 lakhs.

L.S.-

M/s Ribben DM-

Mfs Cepham Ampicilin 75,00 100% F.E. 8.85% 1988 SPA, Milano, amounting to

Medical Leasing Italy

Sodium 0 (net E.O. Rs. 11.50 lakhs of taxes)

M/s Interted LS.

Rayalty 2.5 Mjs J.B.F.

1988 Rescord Methyl

lakhs :3%

Synthetics Corpn., Dopa (net of

E.O. U.S.A.

taxes} 100%

i) D- Alpha Phenylglyc

L.S. ie Base us$

Mfs Kavita M/s ii) D-5.00

Sales Corpn. 1988 Recordati, Alpha lakhs SPA, Italy Phenylglyc (net of

ine Hydrochlo

taxes)

ride Export

.. obligatio n 10% for ten

Accu-LS: years

Shri Dinesh K Shri W.F. Clone us$ Royalty:

Srivastava, New 1988 Mahonly, 2.50 3% on 1 0% amounting

pregnancy lakhs internal to Rs. 8 lakhs

Delhi. USA. detection (net of sales, kits

taxes) and5% on exports for 5 years

Source: As m Table V.4

It was also observed in our data that most the technology

transferred was through MNCs to their affiliates located in the country,

which accounted for roughly 40 percent. 14 percent was accounted by

non-affiliate foreign firms, 37 percent by the Indian firms belonging to

the organized sector. While the public sector accounted for 12 percent of

the technology acquired through foreign sources the remaining 7 percent

was the share of the small-scale units. However, when examined from.

the point of view of joint ventures in the pharmaceutical industry it was I

not very significant for the whole period. The joint ventures represented

as 'technical-financial' was only 14 percent of the total. Further, 10

218

percent were purely financial, whereas 76 percent represented purely

'technical' collaborations. This has an important bearing for the macro­

policy considerations. Some empirical studies have even pointed out

that the beneficial spillover effects of endogenous technology transfer -.

through joint ventures is greater than through other forms of technology

transfer. In fact, this singular reason has been advanced strongly in

support of the need for greater FDI flows. 4 The present evidence from the

Indian pharmaceutical industry is good enough reason to reject such a

proposition that FDI backed joint ventures are greater source of assured

technology supply. The duration of contract of a foreign collaboration

agreement is in fact crucial in determining the alternative technological

choice, in case the technology recipient decides to switchover to another

supplier. In no single collaboration agreement that has been examined

in the data set the duration had not exceeded five years. This again is an

indication of the freedom of flexibility for the Indian drug firms in

choosing the technology of their choice.

V.3 TECHNOLOGY GENERATION IN THE PUBLIC FUNDED RESEARCH LABORATORIES

In 1984, the High technology Committee in the Ministry of

Petroleum and Chemicals had identified 95 bulk drugs, which required

sophisticated technology. We had worked out various therapeutic

categories to which these bulk drugs belonged. The details on high

technology bulk drugs are provided in Table V.6 and Table V.7. Out of

the 95 drugs listed in both the Tables V.6 and V. 7, it is shown that

technology was available locally for 25 drugs.

4 See for example, Henrik Braconier and Frederik Sjoholm, "National and International Spillovers from R&D: Comparing a Neoclassical and an Endogenous Growth Approach", Working Paper Series in Economics and Finance No. 211, December 1997, Sweden.

219

S. No. 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14. 15. 16. 17. 18. 19. 20. 21. 22. 23. 24. 25. 26. 27. 28. 29. 30. 31. 32. 33. 34. 35. 36. 37. 38. 39. 40. 41. 43. 44. 45. 46.

TABLE V.6 LIST OF BULK DRUGS IDENTIFIED BY THE HIGH

TECHNOLOGY COMMITTEE Name Betamethasone* Vitamin A Palmitate Megastrol Acetate Methidilazine HCL Meclazine HCL Vitamin E Acetate Vitamin K Chloroquine phosphate* Resorten Substance (Chloroquinate) Diphenyl Hydantoin* Teramisole Halothane Tetmosol Phenothiazzine Crystalline Insulin Ibuprofen Dapsone Diethyl Carbamazine Citrate Digoxin Pyritmethadine Lynestrenol Ethyl Estradiol3-Methyl Ether (Mestranol) Methyl Testosterone Methane dionone (if produced from DHA Acetate)' Estradiol/Estradiol propionate Ethinyl Estradiol Testosterone j propionate jvalerinate Tetracycline HCL Chlorotetracycline Dimethyl Chlorotetracycline Trihexyphenidyl HCL Baralgan Ketone Tatanus Antitoxin FMD Vaccine Hemacoel Sterile Frusemide* Glybenclamide* Surgical Catagut Needled Absorbable Stature Metronidazole Vitamin B12 42. Dexamethasone Pure*

Testosterone Decanoate j Isocaproate j Phenyl Propionate Testosterone Undecylenate N androlone Decanoate /Phenyl Propionate* Allylestrenol and Ethylestrenol

220

47. 48. 49. 50. 51. 52. 53. 54. 55. 56. 57. 58. 59. 60. 61. 62. 63. 64. 65. 66. 67. 68. 69. 70. 71. 72. 73. 74. 75. 76. 77. 78. 79. 80. 81. 82. 83. 84. 85. 86. 87. 88. 89. 90. 91. 92. 93. 94. 95.

Ethisterone Desoxycorticosterone Phenyl propionate(Docat) Betamethasone Disodium phosphate* Human Chlorionic Gonadotrophin (HOG) Chloramphenicol* Tetracycline* Oxytetracycline* INH* PAS/Sodium PAS* Vitamin A Acetate Dihydro Emetin dihydrochloride Diazepam*. Chlorodiazepoxide* Calcium Gluconate Calcium Lactobionate Ferrous Gluconate Magnesium Gluconate Intestopan Substance Betamathasone Vale rate* Spiro lac Esanzymes (Fungal Diastase) Pyridin & Picolines (Drug intermediates) Hydrocortisone Acetate Hydrocortisone Prednisolone Prednisolone Acetate Prednisone Progesterone 17 -Hydroxy Progesterone Acetate 17-Hydroxy Progesterone Carbonate Dihydro Epi-androsteron Acetate (DHA, intermediate) Methyl Androstemediol (Intermediate) Vitamin E Succinate Testosterone and its salts Ethoheptaxine Cetrate Benzathine Pencillin G Mephetermine Sulfate PhenylButazone* Oxyphenyl Butazone* Chlorthalidone Carbomazepine HCL Imipramine Trimethoprim* Trimethoprim* Salbutamol* Vitamin K and K * Lorazepam* N orethisterone* Nor-Ethinolrolone *

Source : IDMA Bulletin, XV, No. 28, 1984. *Technology available indigenously.

221

TABLE V.7 BULK DRUGS INVOLVING HIGH TECHNOLOGY/

TECHNOLOGY AVAILABLE INDIGENOUSLY (INDIA) Antibiotics: 1. Chloramphenicol 2. Tetracycline 3. O:Ayrtetracycline

Sulpha Drugs Not identified as high technology drugs. Vitamins: 1. Vitamin B12 2. Vitamin K 3. Vitamin K3

Corticosteroids: 1. Betamethasone 2. Dexamethasone Pure 3. Norethisterone 4. Norethindrolone 5. Betamethasone Disodium Phosphate 6. Nandrolone Decanoate 7. Betamethasone Valerate

Anthelmintics: None Immunological Agents: Anti Diabetics: 1. Glybenclamide

Tranquilizers: 1. Diazepam 2. Chlordiazepoxide 3. Lorazepam

Diuretics: 1. Frusemide

Anti TB.Drugs: 1. INH 2. PAS and its salts

Analgesic/ Antipyretics: 1. Phenyl Butazone

Anti-malarials: 1. Chloroquin Phosphate

Anaesthetics: None Anti-Histamines: · None Anti-Dysentery Drugs : 1. Metronidazole 2. Trinidazole

Cardiovascular: None Anti-asthamatics:

None

222

1. Salbutamol

Anti Leprotics: 1. Dapsone (DDS)

Anti- Filarials: 1. Diethyl Carbamazine Citrate

Anti-bacterials: (other than anti-biotics and sulphonamides) 1. Trimethoprim

Source :Worked out by the author on the basis of the following: (a) Reoprt of the Ministerial committee, Ministry of Chemicals &

Fertilisers, 1984. (b) IDMA Bulletin, Vol. XV. No. 28. (c) Ministry of Chemicals and Petrochemicals, Annual Report, 1985-

1986, Govemment. of India.

The National Research Development Corporation (NRDC) has

enlisted 41 process technologies developed entirely in the public funded

research organizations or govemment laboratories. This information is

provided in Table V.8.

TABLE V.S LIST OF PHARMACEUTICAL PROCESS TECHNOLOGIES

DEVELOPED BY NATIONAL LABORATORIES

S.No. Name ofthe Research Process /Product Unit/Laboratory

Acetanilide National Chemical 1. Laboratory, Poona

Theophylline, 2. aminophylline, @ -do-..

~ Caffeine*

3. 70% sorbitol from dextrose -do-monohydrate*

4. Mannitol and 70% Sorbitol -do-from Cane sugar D - Glucosamine

5. Hydrochloride -do-C.P. (GAH)

6. L - Arabinose C.P. -do-

7. Vitamin B6* -do-

Ethyl-2 (p-chlorophenoxy) 8. 2-methyl propionate -do-

(chlofibrate)

9. 2-Amino-5- -do-Chlorobenzophenone,

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I

2-methylamine-5-chloro benzophenone*

10. Colchicine* -do-

11. Diazepam* -do-

N-N, Dimethyl biguanide hydrochloride

12. and phenethyl biguanide -do·· hydrochloride (DMBG-HCL and PEBG-HCL)*

13. Gluceryl Guaicolate * -do-

14. Phenacetin* -do-

15. Phenyl acetic acid* -do-

16. P-nitrophenol* -do-

17. Quinapyramine sulphate / -do-Chloride (vet. drug)

18. Vitamin C* -do-

19. Morphaline from -do-Diethanolfamine

20 Phenoxy acetic acid -do-

21. Calcium Gluconate* CECRI, Karaikudi@

P-aminophenol from 22. P-nitrophenol* -do-

23. P-nitrobenzoic acid* CECRI, Karaikudi@

~ P-aminophenol and 2, 4- -do-24.

diaminophenol*

25. Glyoxalic acid -do-

26. P-aminobenzoic acid -do-

Methaqualone & CECRI, Karaikudi and RRL,

27. Methaqualone Bhubaneswar @ Hydrochloride

28. Strychnine and brocine RRL, Bhubaneswar@ from nux vomica seeds

29. Xanthotoxin from RRL,Jammu@ Heralcium candican roots* Scopolamine hydrobromide

30. from -do-the seeds of Datura innoxiz and datura Metal

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31. Rutin 32. Active Principles of Senna

Hyoscine hydrobromide 33. from

Datura Stramonium 34. Berberine hydrocholoride*

35. Centimizone*

36. Pepsin* 37. Niacinamide

38. B-Hydroxy quinoline from Quinoline

39. human choronic gonadotropin

40. Heavy basic magnesium Carbonate Diagnostic reagent absorbant strips for testing

41. ketonic bodies in urine

Source: NRDC Process, Government of India. * Processes Licensed @ CSIR Laboratories

-do--do-

-do-

-do-CDRI, Lucknow@

-do--do-

-do-

ICMR, Bombay

CSMCRI, Bhavnagar@

DRDE, Gwalior

Out of 41 NRDC process technologies 20 were licensed and the

remaining utilized for want of licensing. An important measure of

indigenous technological capability in the Indian pharmaceutical

industry is the ability to manufacture drugs from the basic stage. An

examination of 34 bulk drugs produced from basic stages 1987 and 1992

revealed~ that 9 drugs were manufactured entirely with local technologies

developed by National laboratories.

Table V.9 shows the list of new drugs developed in various public

funded organizations. The above evidence has clearly brought out the

point that the contribution of public sector R&D, public funded research

institutes, universities and national laboratories to the Indian

pharmaceutical industry has been substantial.

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j

TABLE V.9

GENERATION OF NEW DRUGS FROM PUBLIC FUNDED ORGANIZATIONS

Drug Year of Discovery Therapeutic Use

Urea Stibamine + 1992 For Kala-Azar

Rauwolflz Preparation + 1930 Sedative J Hypotensive

Methaqualone + 1956 Hypnotic

Peruvoside + 1960 In Cardiac Insufficience

Hamycin + 1966 Topical Antifungal (fungal)

-

Centimizone * 1972 Anti-thyroid

Sintamil + 1976 Anti-D~ressant

Enfenamic Acid * 1980 Anti-inflamatory

Source: DST, Department of Science and Technology, Government of India (Compiled from department sources)

*From CSIR laboratories. +From Public Sector Units.

V.4 THE POST-WTO IMPLICATIONS FOR THE INDIAN PHARMACEUTICAL INDUSTRY

j

In the post-WTO scenario the Indian pharmaceutical industry is

undergoing a brisk process of cartelisation, which was, triggered off by

the foreign MNCs the world over, and is now practiced by the Indian

firms. 'The strategy is to acquire a bigger financial muscle through

mergers and acquisitions, which may eliminate the small-scale firms over

a period of time. In the absence of support from government, which is on

the decline from 1988 to 2001, there has been a consistent decline in the

bulk drug exports from the Indian pharmaceutical industry. The

Chemexcil Report for the year 1999-2000 shows that the growth in bulk

drug exports has fallen by 10-15 percent of the previous record of 23 per

cent. Due to international price competition that has become the

hallmark for the past-decade or so, and due to WTO clauses, India has

been importing certain drugs from countries like China at marginally

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cheaper prices, which were hitherto manufactured in the small-scale

sector. Temporarily it may appear profitable, but has serious implication

for a large number of small-scale units in the pharmaceutical industry

which may face closure in the long-run.s

In the post-WTO scenario a number of Indian drug firms, including

major players like, Ranbaxy, Cipla, Dr. Reddy's Labs are also working

out ways to devise altematives to new drug discovery, while also

increasing their R&D budgets for basic research substantially.

Currently many Indian drug firms have opted for Novel Drug

Delivery System (NDDS), which is considered as a cheaper alternative to

basic discovery. NDDS means developing friendly dosage forms of

various formulations with the ultimate aim of increasing their

convenience to patient by modifying the dosage form. The Indian firms

have adopted this strategy in the post-WTO scenario, using NDDS as a

means of maintaining their product revenues and prolonging the product

life cycle, in the sense of extending the life of a patent. In India at least

10-15 companies are reported to have made a succes·s in NDDS

discovery, though the future results are yet to be seen. At present

NDDS discovery is developed mainly in the therapeutic areas like

antibiotic, anti-infective, cardiovascular, respiratory and NSAIDS.

The implications. for the consumer are also going to be very drastic.

First, there would be an immediate increase of prices as has been argued

throughout the thesis. Second, for the consumer, the time lag between

the first introduced drug in the world market and in India is likely to be

longer in the post-2005 scene.

Intrinsically there is a distinction between original discoveries like

Penicillins, erythromycin, rifampicin, beta-blockers, ACE-inhibitors, Ca­

Channel blockers etc., and Second and Third generation drugs. Some

5 30 Small sclae drug units manufacturing paracetamol were closed down in 2001 ,, and several others face closure due to cheaper imports from China. K. Santosh Nair, "Huge Imports Force Paracetamol Units' Closure", May 10, 2001, www.pharmabiz. com.

227

times the second and· third generation drugs have been more effective

than the first generation discoveries. Indian · pharmaceutical finns

should embark upon the strategies, which would synergise their efforts

through collaborative research with public funded research

organisations, universities and national laboratories. Simultaneously, an

international consortium of pooled R&D may be worked out with

countries like Brazil, China and Mexico, through natural cooperation and

exchange. However the success of these developments, if it happens

would depend on, among other things, a state controlled regulatory

mechanism rather than unbridled free-fare that is envisaged under the

WTO regime.

V.S SUMMARY

The emphasis on technology generation has been part and parcel

of the philosophy of self-reliance practiced in India. The efforts to gear

up indigenous technological capabilities picked up momentum in the late

1970s during which period the recommendations of the Hathi Committee

Report played a crucial role. The introduction of the concept of

'essentiality in drugs had resulted in the pursuit of 'need based'

technology in the Indian drug industry.

The R&D expenditure in the drug industry, which stood at Rs. 10.5

crores in 1976-77, had increased to Rs. 320 crores in 1999-2000. The

number of firms recognized by the government with in-plant R&D

facilities was around 139 in 1992. This number has gone up to 146 by

1998.

Data have been analysed for 255 foreign collaboration agreements

for the period between 1951 and 1986 and separately for 37 more

collaborations from 1987 to 1991. It was found that most of the

contracts executed during the period 1950 and 1970 were technical and

the duration of contracts was restricted to 2 to 3 years. The total

number of collaborations involved was between 125 domestic firms and·

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128 foreign firms from about 24 countries. Out of total 255 the highest

number of 57 contracts were executed between the US and Indian firms

which works out to roughly 22 per cent. The UK, Switzerland, FRG,

ITALY, Sweden, Japan, the Netherlands, France, Belgium, Bulgaria,

Yugoslavia, Canada, Romania, USSR, Panama, South Korea, Poland,

Portugal and others followed this. The percentage of pharmaceutical

collaborations as a proportion of the total manufacturing industry

worked out to be less than 3 percent for the forty-two year period

between 1950 and 1992.

The stringent conditional clauses observed in contractual

obligations for the Indian manufacturing industries in the study of

Subrahmanian, for the period until 1970, were not applicable to the

Indian pharmaceutical industry.

From 1992 onwards it was found that the process of acquisition

and generation of need based essential drug technologies was thrown out

of gear. The evidence in the data suggests that the largest number of

technologies imported after 1980 were for inessential drugs. The cn1cial

technology supplier for this category of drugs was the US. The overall

terms of reference in the contractual agreements, it was observed, that

Indian drug firms had the freedom to choose the technology of their

choice. ~Indian drug units were endowed with the high technology bulk

drug manufacture in the year 1984 itself. Further there is clear evidence

that 41 process technologies were developed entirely in the public funded

research organizations or govemment laboratories. The major drugs that

were discovered for various diseases ranged from anti-inflammatory,

anti-depression to anti-fungals and cardiologicals.

The post-WTO scenario is not quite assuring for the Indian drug

industry. Faced with the challenge from the giant MNCs, the Indian

firms are forced to follow the same path of cartelisation and

centralization to withstand the pressures. Despite adopting similar

methods these firms cannot match the financial strength of the foreign

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MNCs in any comparable manner. The improvised mechanism for drug

research and discovery followed at present by certain Indian firms, in the

aftermath of the WTO, namely the NDDS, also is an inadequate and

temporary ameliorative.

The possibility of shifting to second and third generation drug

discovery is one alternative that may be meaningful in the short-run. In

the long run, however, the integrative and coordinated efforts between

universities, public funded research organizations, govemment

laboratories and the indigenous firms shall be more meaningful.

230